– Early close for US equity and bond markets
– Gold prices leap 1.7% since yesterday’s low
– US dollar choppy in holiday-thinned markets
USDCAD Snapshot: Open 1.2723-27, Overnight Range 1.2718-1.2749, close 1.2739, WTI open $76.27, Gold open $1819.64
The Canadian dollar is bouncing erratically in a 1.2718-1.2749 band due to poor liquidity and year-end flows.
The S&P 500 rose over 4.5% in December, which usually means portfolio managers need to buy Canadian dollars to rebalance their portfolios. That has helped drive USDCAD from 1.2846 on Monday to 1.2718 today.
Further rebalancing may continue in early January.
The Canadian dollar is also supported by the nearly 16% rise in WTI oil since December 20. Oil prices are underpinned by falling US crude inventories in the past two weeks, supply disruptions in some producer markets, and hopes that Omicron will not impair global growth in 2022.
Omicron stories continue to dominate the news cycle.
Canada reported 27,245 new cases yesterday, and authorities in hard-hit Quebec imposed curfews, banned gatherings in homes, and canceled in-restaurant dining.
US COVID-19 cases were 344,543 on Thursday, wreaking havoc with airline travel schedules and New Year’s Eve plans. Global markets do not seem to care.
President Biden and Russian President Vladimir Putin held a video call yesterday. The results were a tad less than cordial as both men exchanged threats. The White House issued a press release which stated, “President Biden urged Russia to de-escalate tensions with Ukraine. He made clear that the United States and its allies and partners will respond decisively if Russia further invades Ukraine.”
Russian foreign policy advisor Yuri Ushakov countered. “Our president immediately responded that if the west decides in this or other circumstances to impose these unprecedented sanctions which have been mentioned, then that could lead to a complete breakdown in ties between our countries and cause the most serious damage to relations between Russia and the west.”
FX traders did not react to the news, but gold prices climbed to $1820.00 from $1780.00 yesterday.
It is shaping into a quiet day, which could be interrupted by brief bouts of volatility around the 11:00 am ET fix.
There are not any economic reports from the US or Canada, US stock and bond markets close early.
Happy New Year’s from Knightsbridge Foreign Exchange.